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Don't HR Alone #56 - Weekly Compliance Update

This Week’s Update,(Aug. 21, 2017)

Retirement plans.

The U.S. Department of Labor (DOL) has issued a second set of frequently asked questions (FAQs) about the transition period for its fiduciary rule. The new guidance covers:

  • a “fiduciary status disclosure” issue under the DOL’s ERISA Sec. 408(b)(2) service provider disclosure regulation applicable to ERISA pension plans;

  • whether recommendations to plan participants and IRA owners to contribute to or increase contributions constitute fiduciary investment advice under the fiduciary rule; and

  • whether recommendations to employers and other plan fiduciaries on plan design changes intended to increase plan participation and contribution rates constitute fiduciary investment advice under the rule.

Nondiscrimination in health programs.

A federal district court in Texas granted the U.S. Department of Health and Human Services (HHS) a stay on proceedings involving a final rule provision that prohibits discrimination based on “gender identity” and “termination of pregnancy” in federally funded health programs. Staying the case and resuming consideration of all pending motions after agency review of the rule will promote judicial efficiency and impose no undue prejudice on the plaintiffs, reasoned the court. This new order does not impact an earlier nationwide preliminary injunction, which remains in full force and effect throughout the duration of the stay and until further order of the court. The development in the case, Franciscan Alliance, Inc. v. Price.

Health care reform.

Executive Order 13765, Minimizing the Economic Burden of the Patient Protection and Affordable Care Act (ACA) Pending Repeal, does not release employers from making shared responsibility payments, according to two information letters from the IRS. The executive order, issued on January 20, 2017, merely directs federal agencies to exercise their authority and discretion to reduce the ACA’s potential burden. It does not change the law; thus, the ACA’s legislative provisions — including the obligation to pay employer shared responsibility payments if owed — are still in force.

Contraceptive coverage. Affirming a district court’s grant of summary judgment to the federal government, the Third Circuit determined that the religious exemption to the ACA’s contraceptive mandate did not apply to a secular anti-abortion group with no religious affiliation. The appeals court also found that the mandate did not substantially burden employees’ religious beliefs. The case is Real Alternatives, Inc. v. HHS Secretary


The average basic premium for a Medicare Part D prescription drug plan is projected to be $33.50 per month in 2018, down from $34.70 per month in 2017, according to an announcement from the Centers for Medicare & Medicaid Services (CMS). While spending for the Part D program is increasing faster than other parts of Medicare, largely driven by high-cost specialty drugs, CMS said it is committed to making premiums affordable so that seniors and people with disabilities in Medicare can access the prescription drugs they need.

Consumer prices. The CPI-W decreased 0.1 percent in July before seasonal adjustment. The index level of 238.617 was 1.6 percent higher than in July 2016. The CPI-U also decreased 0.1 percent in July before seasonal adjustment. The index level of 244.786 was 1.7 percent higher than in July 2016.

Minimum wages. Arizona’s Proposition 206 (The Fair Wages and Healthy Families Act), approved by voters in November 2016 to increase the state’s minimum wage and establish earned paid sick leave, recently survived a challenge brought by the Chamber of Commerce. In Arizona Chamber of Commerce & Industry v. Riley, the Arizona Supreme Court found that the initiative did not unconstitutionally propose a mandatory expenditure of state revenues without providing a source of funding, nor did it violate the state’s Separate Amendment Rule or Single Subject Rule.

In other news, Rhode Island has enacted a minimum wage increase as part of its 2018 budget bill. The hourly minimum wage will increase from $9.60 per hour to $10.10 per hour on January 1, 2018, and to $10.50 per hour on January 1, 2019.

Employer identification numbers. The IRS has reissued Form SS-4, Application for Employer Identification Number. While there were no substantive changes to the form itself, the initial “Update” page now includes information about disregarded entities. Filers should rely on the update for the changes described, which will be incorporated into the next revision of the form and instructions.

Salary planning. Virtually all employers (99 percent) plan to give their employees a pay raise next year, according to a new salary planning survey from Willis Towers Watson Data Services. U.S. salary increase budgets are expected to average 3.0 percent for exempt nonmanagement (professional), management, and nonexempt employees, and 3.1 percent for executives. Employers are continuing to reward their best performers with significantly larger raises for retention purposes and to strengthen their commitment to pay for performance.

Productivity. For the second quarter of 2017, preliminary figures from the U.S. Bureau of Labor Statistics (BLS) show that the seasonally adjusted annual rates of productivity growth were 0.6 percent in the business sector, 0.9 percent in the nonfarm business sector, and 2.5 percent in manufacturing (3.8 percent in durable manufacturing and −0.1 percent in nondurable manufacturing).

Turnover. The turnover rate was 3.7 percent (before seasonal adjustment) during June, according to the BLS’s latest Job Openings and Labor Turnover Survey (JOLTS). For more information, including turnover rates by industry, contact us for a table emailed to you!

Employment. In July, the unemployment rate dipped slightly to 4.3 percent, while payroll employment rose by 209,000. Employment increased in food services and drinking places, professional and business services, and health care.

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